I'm a technology, privacy, and information security reporter and most recently the author of the book This Machine Kills Secrets, a chronicle of the history and future of information leaks, from the Pentagon Papers to WikiLeaks and beyond.
I've covered the hacker beat for Forbes since 2007, with frequent detours into digital miscellania like switches, servers, supercomputers, search, e-books, online censorship, robots, and China. My favorite stories are the ones where non-fiction resembles science fiction. My favorite sources usually have the word "research" in their titles.
Since I joined Forbes, this job has taken me from an autonomous car race in the California desert all the way to Beijing, where I wrote the first English-language cover story on the Chinese search billionaire Robin Li for Forbes Asia. Black hats, white hats, cyborgs, cyberspies, idiot savants and even CEOs are welcome to email me at agreenberg (at) forbes.com. My PGP public key can be found here.

The second staffer is TQP’s owner, Erich Spangenberg, a lawyer who bought Jones’ patent, and for the last four years has used it to sue every technology, banking, and web commerce company in sight.

Since 2008, Spangenberg and his company TQP have launched suits against hundreds of firms, claiming that their use of a common cryptographic protocol in the HTTPS-encrypted portions of their web properties violates the patent invented by Jones and acquired by TQP in 2006. So far Spangenberg’s targets have included Apple, Google, Intel, Dell, Hewlett-Packard, every major bank and credit card company, and scores of web startups and online retailers, practically anyone who encrypts pages of a web sites to protect users’ privacy. And while most of those lawsuits are ongoing, many companies have already settled with TQP rather than take the case to trial, including Apple, Amazon, Dell, and Exxon Mobil.

“When the government grants you the right to a patent, they grant you the right to exclude others from using it,” Spangenberg says simply when I reach by phone him in his Dallas office. He makes no apology for the fact that TQP doesn’t use the encryption patent itself, or even have a website. “If you buy a hundred-foot lot in the middle of Manhattan, you’re not required to develop it…Companies have the right to protect their IP dollars.”

TQP is just a small part of Spangenberg’s empire of 247 IP-focused companies, most of which were created with the sole purpose of holding patents and filing lawsuits against those unlucky enough to infringe them. Corporate Counsel magazine has described his flagship firm, IP Nav, as one of the “largest, and most litigious, patent-holding companies” and writes that he advises a “sue first, ask questions later” approach. The same article cites PatentFreedom as counting more than 500 suits filed by his corporations since 2005. Spangenberg’s lawsuits are so numerous that even he may not be able to track them: In 2008 a court awarded Mercedes-Benz and Chrysler $3.8 million when one of Spangenberg’s companies sued the auto giants for patent infringement, violating a settlement they had already agreed to with another of his firms over the same issue.

But even among Spangenberg’s companies, TQP has focused its litigation on an especially widespread technology. In legal complaints against defendants, like a recent one targeting Intel, it has accused companies of infringing its patent by implementing the popular RC4 encryption algorithm in combination with the common web encryption protocols SSL and TLS. But when I point out to Spangenberg that RC4 was invented by MIT cryptographer Ron Rivest in 1987, two years before the filing date of TQP’s patent, he counters that defendants’ infringement actually has nothing to do with RC4. Instead he claims the infringement lies solely in the use of the SSL or TLS “handshake” that establishes a secure connection between a web browser and a web server, a technology invented in 1994 and used by virtually every secure web page.

Given that practically every site that offers encryption uses those two protocols, would that IP monopoly mean no one can encrypt web traffic without paying TQP?

“It just so happens that the [technology] TQP reads on is the one the vast majority of companies are using. Other solutions are out there. They just choose not to use them,” says Spangenberg. ”If they do choose to use it because of the way…[the patent's original filer] Michael [Jones] created it, that’s a huge compliment to Michael.”

But TQP can also retroactively sue companies that use SSL or TLS even if they weren’t aware of TQP’s patent at the time they used the encryption schemes, says Jim Denaro, an attorney with the Cipher Law Group who has analyzed TQP’s history. In fact, Denaro says the patent expired in May of this year. But U.S. patent law still gives TQP a six-year period when it can sue companies for prior infringement of the defunct patent. “You can expect to see even more aggressive enforcement, because they’re in that six-year look-back window,” says Denaro. “I have no reason to believe it will abate.”

The fact that the encryption patent uses archaic language about “modems” and “voice-grade telephone lines”–and that it even predates the World Wide Web itself–hasn’t stopped the flood of legal attacks. “You could ask, ‘How can you have a patent applied to a technology that didn’t exist at the time it was filed?,’” says Denaro. “That would be a fair criticism of the U.S. patent system.”

Spangenberg says that TQP acquired Jones’ patent from Crain Communications in 2006, at a time when renowned cryptography guru Bruce Schneier was advising his firm. But when I reached Schneier for comment, he told me a very different story: Schneier says he worked with Michael Jones on a technology related to secure payment systems in the 1990s. But since Jones’ work was acquired by TQP and used for lawsuits, he’s actually consulted to a half-dozen defendants in Spangenberg’s cases, many of whom settled for undisclosed sums rather than risk an expensive trial.

Schneier describes TQP as a “really bad patent troll” and the intellectual property it’s using to cudgel defendants as a “crappy patent” that ought to be invalidated by prior art–evidence of previous invention of the same technology.

“Near as I can tell, there is lots of prior art and the patent doesn’t infringe where the owners claim it does.” Schneier wrote to me in an email. “But company after company settles, and the troll wins.”

Spangenberg defends the validity of Jones’ work by pointing to a failed challenge to the patent filed by TD Ameritrade in late 2010, which was rejected by the Patent and Trademark Office.

“How did this get through on a reexamination when TD Ameritrade spent hundreds of thousands or millions of dollars and failed?” asks Spangenberg. “Eighty percent of patents that go in for reexamination come out changed or invalidated. This one came out stronger and validated.”

Spangenberg declined to share any numbers about the revenue of his vast IP enforcement operation. But his real estate holdings seem to show off impressive profit: He and his wife Audrey, also an IP lawyer, live in a six-bedroom, seven-fireplace mansion worth $9.3 million, according to public records, and bought two half-million dollar condominiums in Las Vegas in 2010.

The lawsuits that generated that apparent wealth, Spangenberg argues, serve to protect innovation in an age when it’s especially crucial to America’s future, as low-cost U.S. manufacturing becomes a thing of the past. “A strong protection of IP rights is important to protecting our economy,” he says. “Would you use a bank’s website if it wasn’t encrypted?”

And if that means suing every company that uses the web’s most common privacy technology? “The world would be a better place if people understood intellectual property,” says Spangenberg. “I don’t understand why just because it’s prevalent, it should be free.”

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I fail to see how this article relates to the current administration, especially as the laws forming the basis of the patent award and review process have been in place for decades. The Executive branch of our government does not make (Legislative) or enforce (Judicial) the laws at play here. If there is a fault that allows this behavior, it’s spread across all branches and parties. Here’s an excellent introduction for you: congressforkids.net

The Obama Administration doesn’t have anything to do with this. The article clearly says he’s been Spangenberg and TQP has been doing this since 2008, when the Bush Administration was in power. Besides, the laws allowing this sort of unscrupulous behavior have been in place for decades.

Why write a negative article about the company and Spangenberg? For one, it’s pathetic behavior. More importantly, journalists should draw attention to important issues that probably need to be addressed. This is definitely one of those issues.

Patent laws have gotten ridiculously out of hand and are now being used to go beyond simply encouraging people to innovate and create products and sell them. They’ve extended into the realm of the ridiculous with unscrupulous individuals/companies engaging in behavior like Mr. Spangenberg and TQP here or Apple actually being allowed to patent a rectangle with rounded corners. We are at a point where companies are not using patents to innovate and create products, but instead to stifle innovation and prevent others from creating products. It’s bad for the economy. Mark Cuban and others have talked at length about this.

Going by what you’re saying people shouldn’t criticize anything if a society’s laws make it legal. That’s a preposterous notion which I’m sure even you violate.

Well, it is not quite a case of ‘living by the law’. The way these holding companies operate is they bank on the fact such lawsuits are expensive to defend against (even a simple one runs into the millions just to litigate) so they settle for less then that. While technically legal, it represents a pretty significant abuse of the current situation. There is also a reason the vast majority of these cases are filed in a specific region of Texas, a court system that has discovered it is profitable to have all these cases tried there and thus tends to be VERY friendly to plaintiffs.

And lastly.. people have free will. Just because something is legal does not mean it has a positive effect, and people can still be held morally accountable for taking advantage of the letter of the law.. in this case to bilk millions out of companies that the IP owner doesn’t deserve. This lawyer chooses to make his money this way… and that is what makes him a scumbag.

Just because it’s legal doesn’t mean it’s right. Such lawsuits are not so much frivolous as pernicious. Mr Spangenberg is perverting a system meant to foster and reward innovation into a legal nuisance and method of extortion because he counts on companies finding it cheaper to buy him off than to successfully refute him in court.

As such, he is undermining the system as he exploits it, and we all pay for the damage.

The question of why we should consider something prevalent as free. The biggest problem I have with intellectual property protections is they seem to have a much wider legal latitude that physical patents. It seems to me that physical items can be patented using a different physical device even though it provides the same results as a device under another patent. The intellectual property patent is often allowed to extend to other software that provides similar results.

It’s not that hard to develop a piece of software that performs differently but delivers the same results. I know there are plenty of examples that I don’t know what I’m talking about. Let me narrow it down, problems usually occur with single or limited purpose software rather than large systems. My real question is where’s the dividing line.

For what it’s worth, previous Obama has promised to revamp the patent office at some point within the next year. Will revamp mean a more open, use it or lose it style of patent, or will they focus on making it possible for patents to last for ridiculously long terms, like copyright does?